England has to become "the nation of the second chance" to rehabilitate people who have been forced by fear into embracing gang culture and become involved in a justice system that has "ludicrous" reoffending rates, the work and pensions secretary, Iain Duncan Smith, has said.

Lawbreakers must be punished but also offered a way out of their present situation, said the minister, who is considering reducing benefits and rights to social housing for families of those responsible for violence and looting.

Duncan Smith said there must be "strong punishment but sensible punishment". He said: "The idea the length of the sentence is going to solve the problem is simplistic nonsense." But he insisted: "No one is beyond help. I have never believed that; I have always believed in the nation of the second chance."

The ministers' interventions in the debate about the causes and consequences of the riots follow David Cameron's promise that the government would review every aspect of its work "to mend our broken society" and came as the Commons home affairs select committee prepared to examine police tactics during the riots.

"What we have is a system that had been far too often just a reactive system and what it has to recognise is that once you arrest someone as a deterrent, and you punish them, once you've got them in custody you have to do something with them.

"What has so much gone missing inside the criminal justice system is that the reoffending rates in the UK are ludicrous and what we end up doing is arresting and re-arresting and re-re-arresting the same people for different crimes."